Example of User-Defined Fiscal Classifications
Use the user-defined fiscal classifications when you need additional or more appropriate classifications to classify transactions for tax determination and reporting.
This scenario illustrates how you can use user-defined fiscal classification to identify if a customer is a foreign diplomat and therefore, exempt from value-added tax (VAT).
Scenario
To model this scenario, create a user-defined fiscal classification that is added to a transaction line only when the customer is a foreign diplomat and VAT is exempted.
In practice, it's likely that most businesses monitor such transactions and therefore, specifically create a zero (0%) rate within the exempt tax status to allow monitoring of such situations. By reporting this specific 0% rate, all applicable transaction can be identified.
Create the following user-defined fiscal classification:
Fiscal Classification Code |
Fiscal Classification Name |
Country |
Start Date |
---|---|---|---|
FOREIGN DIPLOMAT EXEMPTION |
Foreign Diplomat Exemption |
United Kingdom |
The earliest transaction date or start date of tax. |
Set up the following determining factor for the tax rule that defines the condition where the sales transaction is zero percent (0%) rated using the special exempt rate, tax status, and tax rate rule:
Determining Factor Class |
Class Qualifier |
Determining Factor |
Operator |
Value |
---|---|---|---|---|
Transaction Input Factor |
- |
User-Defined Fiscal Classification |
Equal to |
FOREIGN DIPLOMAT EXEMPTION |
The tax rule, to apply a zero tax rate to a transaction, is applicable only when the user-defined fiscal classification is associated with the transaction line.
Specify the country name while creating the user-defined fiscal classification. This ensures that only a limited applicable list is presented during transaction or tax rule creation.